Big-box retailers such as Target, Walmart, and Home Depot have all blamed theft and retail shrink for their dismal earnings report, but Best Buy has seemingly bucked the trend, telling investors their stores have remained relatively stable.
Best Buy CEO Corie Barry said on a call with investors earlier this week that even though stores across the country had seen an uptick in the number of break-ins and smash-and-grab jobs, it has been able to blunt the activity by putting more employees on the floor, locking up high-priced items, and offering only a few self-checkout counters.
CALIFORNIA IS GROUND ZERO FOR RETAIL THEFT PROSECUTION CONTROVERSY
Another deterrent has been only using one entrance and exit, she said.
“We usually just have one entrance in our stores, we tend to have less self-checkout, and we have a very high digital penetration at 33%,” she said, referring to the share of sales completed online versus in stores.
Retailers across the country have been getting pummeled by brazen attacks at their stores this year, leaving employees rattled and businesses failing to meet earnings estimates.
Target, for example, recently said “retail shrink” is expected to cost the company $1.2 billion in 2023, up from $500 million last year. In its earnings call, Dick’s Sporting Goods blamed retail theft for a 23% quarterly drop in profits, while Walmart’s CEO warned that it may have to close some stores if the problem continues. Even Dollar Tree, which sells goods for $1.25, has been hit and could be forced to start locking up items to prevent theft.
The most recent study on how stealing and organized retail crime affect retailers was released last year by the National Retail Federation, the world’s largest retail trade association. It found that in 2021, retail shrink amounted to a whopping $94.5 billion in losses.
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Retail shrink refers to the difference between how much inventory a retailer is supposed to have on their balance sheet and how much they actually have. Shrink can be anything from shoplifting to employee theft, cashier error, or damaged goods sent by the vendor.
Critics claim shrink is sometimes a convenient catchall for other problems difficult to pinpoint, such as employee theft and other merchandising mishaps, but stores the Washington Examiner spoke to said the spike in retail theft is real and is crippling not only large stores but small mom and pop ones as well.
